Acquisitiv.
Menu
Book a briefing

Acquisition criteria template (free download)

Last updated

In shortAn acquisition criteria template is a one-page list of what a target business must look like before you'll spend time on it: why you're buying, sector, size, location, ownership, customers, management, must-haves, deal-breakers, the most you'll pay and when. Writing it down before you search stops you chasing every business that comes along and gives advisers and owners a clear brief. Our free template is available to Acquirers Club members.

Most buyers can describe the business they want in a sentence. Very few have written it down in enough detail to say no quickly. That's what acquisition criteria are for.

This page shows the structure of our free template, filled in for a fictional buyer, and how to use it. Members of the Acquirers Club can download the blank version.

What are acquisition criteria?

Acquisition criteria are the tests a business has to pass before you put real time into it. They turn your acquisition thesis (the reason you're buying at all) into things you can check: size, sector, location, customers, people, price.

Good criteria do two jobs. They help you find targets, because you know what to look for. And they help you drop targets early, before you've spent money on lawyers and accountants. The second job matters more than most buyers think.

What does the template look like?

Here it is completed for a fictional buyer: a UK fire and security services group with about £40m revenue, looking for regional bolt-ons. The business and the numbers are made up to show how each line works.

Section What to write Worked example: fictional fire and security group
Strategic rationale Why buy rather than grow organically? What does the target add? Add maintenance contract revenue in regions where we have no engineers, so we can serve national clients across the whole of the UK
Sector and sub-sector Be specific about what's in and out In: fire alarm, emergency lighting and intruder/CCTV installation and maintenance. Out: pure installation contractors with no maintenance book; fire suppression for marine
Size: revenue A range £2m–£10m
Size: EBITDA A range, after a fair owner's salary £0.3m–£1.5m
Size: margin The floor you'll accept EBITDA margin of 10% or more
Geography Regions, and what's off the table North of England, Midlands, Wales. Not Scotland or London (already covered)
Ownership Who you expect to be selling Founder- or family-owned, owner aged 55+ or with no clear successor. Not PE-backed
Customers and concentration Customer type and the most any one can be Commercial, education, healthcare and housing. No customer above 15% of revenue; top 5 below 40%
Management depth Who must stay, and for how long An operations manager or senior engineer who can run the business day to day; owner willing to stay 12–24 months
Must-haves Three to five things without which you walk 60%+ recurring maintenance revenue; recognised third-party accreditation (e.g. NSI or BAFE); clean health and safety record
Deal-breakers Three to five automatic no's Open regulatory or safety investigations; one customer above 25%; heavy reliance on subcontracted engineers; disputed accounts
Price discipline The most you'll pay, and how you'll pay it No more than 6x adjusted EBITDA. At least 20% deferred or tied to performance
Timing When you want to complete, and capacity First deal completed within 12 months; no more than one integration running at a time

Notice that every line can rule a business out. "Good quality business" isn't a criterion. "60%+ recurring maintenance revenue" is.

How do I use the template?

  1. Start with the rationale. Write two or three sentences on why you're buying. If you can't, stop and work on your acquisition thesis first. Every other line should follow from it.
  2. Fill in the ranges, not single numbers. A revenue range of £2m–£10m will surface far more owners than "about £5m". Set the EBITDA range after a fair salary for the owner, or the numbers won't compare.
  3. Limit must-haves and deal-breakers. Three to five of each. If you list ten must-haves, you're describing a business that doesn't exist.
  4. Set your price ceiling now. Decide the most you'll pay before you meet an owner you like. It's much harder afterwards. Our guide on how to value a business to buy explains how to set it.
  5. Test it against real companies. Take ten businesses you already know in your sector and score them. If none pass, the criteria are too tight. If all pass, they're too loose.
  6. Share the short version. Give a trimmed copy (without your price ceiling) to brokers, advisers, your bank and your accountant. It's the quickest way to get relevant introductions.
  7. Use it to build your list. Criteria are the filter for an off-market search. See how to find off-market acquisition targets in the UK.
  8. Review every quarter. Criteria should change as you learn what's out there. Write down what you changed and why.

What mistakes do buyers make with acquisition criteria?

The most common one is not writing them down, so the target list drifts towards whichever business turned up last. The second is making them so broad they rule nothing out. The third is skipping price discipline. Buyers who haven't set a ceiling tend to find a reason to pay more once they're emotionally invested.

Criteria won't make a bad deal good. But they will save you from a lot of meetings that were never going to lead anywhere.

How do I get the template?

The blank template is free for members of the Acquirers Club, alongside our weekly email, monthly report and the rest of the resource bank. Join below and we'll send it straight to your inbox.

Frequently asked questions

What should acquisition criteria include?

At minimum: why you're buying, sector, size (revenue and EBITDA), geography, ownership type, customer mix, management depth, must-haves, deal-breakers, the most you'll pay and your timing. If a line can't rule a business out, it isn't doing its job.

How detailed should acquisition criteria be?

One page. Use ranges rather than single numbers, and keep must-haves and deal-breakers to three to five each. Too tight and you'll find nothing; too loose and you'll waste months on poor fits.

Should I share my acquisition criteria with business owners?

Share a short version with advisers and brokers so they can send you relevant businesses. With owners, talk about why you'd be a good home for their business rather than reading out your checklist, and keep your maximum price to yourself.

Free download

Get it free with the Acquirers Club

Join once to download every template. One email a week, no pitches.